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Full electricity sale still a possibility

NSW Premier Barry O'Farrell has not ruled out the full privatisation of the state's power assets, if that is what is recommended by an inquiry into the former government's $5.3 billion sell-off.

A special commission of inquiry, ordered by Mr O'Farrell into the partial privatisation of NSW energy assets, began on Monday.

Its first public hearing came on the same day a report was leaked to News Ltd showing that the state-owned distribution networks in NSW and Queensland were charging almost twice as much as the privately run distributors in Victoria.

Network charges were identified by the Independent Pricing and Regulatory Tribunal (IPART) last month as accounting for more than half of the 17 per cent increase in electricity prices in NSW from July this year.

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The report from the Energy Users Association of Australia attributes the gap to wasteful spending by the state-owned networks and the large dividends paid to the state governments, News Ltd says.

Asked if NSW would consider the full privatisation of the energy sector to keep power prices down, Mr O'Farrell said he would not make a decision until the commission of inquiry had examined the whole of the state's power industry.

"We've said all along, whether it is buyback, or other options, that they're matters for the commissioner to report on," he told reporters in Sydney.

"We've put no limits on the inquiry, we deliberately didn't do that.

"We want this commission of inquiry to get to the bottom of the power sell-off that occurred before Christmas, to let us know precisely what that means for the state, but secondly, to set the future course for the state's electricity industry, having in mind the need to keep power prices as low as possible."

Mr O'Farrell and his coalition colleagues went to the NSW election in March promising that the state would retain ownership of the "poles and wires" distribution network, which was not sold under the controversial privatisation of some generators.

However, Mr O'Farrell said on Monday that his government had also committed to the commission of inquiry and its recommendations.

"We are determined to do what we can to keep power prices as low as possible," he said.

"The commission of inquiry can make its recommendations according to its terms of reference... and we'll accept that report when it comes in."